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uNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
) U.S. SECURITIES AND EXCHANGE ) COMMISSION, ) 100 F. Street, NE ) Washington, D.C. 20549 )
)
Plaintiff, Case: 1:1O-ev-01891
v. Assigned To: Bates, John D. Assign. Date: 11/4/201.0. Description: General CIvil TRANSOCEAN INC.
70 Harbour Drive, Floor 4 , P.O. Box 10342 ) George Town, Grand Cayman ) Cayman Islands, KY-I003 )
) Defendant.· )
)
COMPLAINT
Plaintiff, u.S. Securities and Exchange Commission (the "Commission"), alleges:
SUMMARY
1. This matter involves violations of the anti-bribery, books and records, and
internal controls provisions of the Foreign Corrupt Practices Act ("FCPA") by
Transocean Inc. ("Transocean"), an international provider of offshore drilling services
and equipment to oil companies throughout the world, including Nigeria. From at least
2002 through 2007, Transocean made illicit payments through its customs agents to
Nigerian government officials to extend the temporary importation status of its drilling
rigs, to obtain false paperwork associated with its drilling rigs, and obtain inward
clearance authorizations for its rigs and a bond registration.
2. In addition, Transocean made illicit payments through Panalpina World
Transport Holding Ltd.'s Pancourier express courier service to Nigerian government
officials to expedite the import of various goods, equipment and materials into Nigeria.
In most instances, customs duties for these items were not paid by either Panalpina or
Transocean. In addition, Transocean made illicit payments through Panalpina to
Nigerian government officials to expedite the delivery of medicine and other materials
into Nigeria. Transocean's total gains Jrom the conduct were approximately $5,981,693.
3. Transocean violated Section 30A of the Securities Exchange Act of 1934
("Exchange Act") by making unlawful payments through its customs agents to Nigerian
government officials to obtain false documentation related to temporary import permits
and false paperwork to make it appear that it had lawfully moved its rigs in and out of
Nigerian territory ("paper moves"). Transocean also violated Section 30A by making
unlawful payments through its customs agent to Nigerian government officials in
connection with the inward clearance of its vessels into Nigerian waters, and by its use of
Panalpina and Pancourier to import various goods, equipment and materials into Nigeria.
4. Transocean violated Section 13(b)(2)(B) ofthe Exchange Act by failing to
maintain internal controls to detect and prevent unlawful payments to customs officials in
Nigeria. Additionally, Transocean violated Section 13(b)(2)(A) of the Exchange Act by
improperly recording the illicit payments to Nigerian customs officials in its accounting
books and records.
JURISDICTION
5. This Court has jurisdiction over this action under Sections 21 (d), 21 (e),
and 27 ofthe Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa]. Transocean,
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directly or indirectly, made use of the means or instrumentalities of interstate commerce,
of the mails, or of the facilities of a national securities exchange in connection with the
transactions, acts, practices, and courses ofbusiness alleged in this Complaint.
6. Venue is appropriate in this Court under Section 27 of the Exchange Act
[15 U.S.C. § 78aa] or 28 U.S.C. § 1391(d).
DEFENDANT
7. Transocean Inc. ("Transocean") was a Cayman Islands corporation
during the relevant period with its principal executive offices in the Cayman Islands and
Houston, Texas. Transocean was traded on the NYSE under the symbol "RIG" and was
registered with the Commission pursuant to section 12(b) of the Exchange Act. In
December 2008, Transocean completed a merger between Transocean Ltd., Transocean
Inc., which was the former parent holding company, and Transocean Cayman Ltd. As a
result, Transocean Inc. became a wholly owned subsidiary of Transocean Ltd.
Transocean Ltd. is currently a Swiss corporation with principal executive offices in
Vernier, Switzerland. The merged company continues to be registered with the
Commission under Section 12(b) of the Exchange Act and trades on the NYSE under the
symbol "RIG." Transocean is the world's largest international provider of offshore
drilling services and equipment. Its clients are leading international oil companies as
well as many government controlled and smaller independent oil companies. Transocean
has offices throughout the world, including Nigeria and the United States.
RELEVANT ENTITIESIINDIVIDUALS
8. Panalpina World Transport Holding Ltd. ("Panalpina") is a Swiss
company that provides freight forwarding and logistics services to businesses in more
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than eighty countries. Panalpina also collaborates closely with local partners in eighty
additional countries to provide freight forwarding services. Fonnerly a private company,
Panalpina was listed on the Swiss Exchange on September 22, 2005. During the relevant
period, Transocean used Panalpina and Pancourier, an express door to door courier
service operated by Panalpina, to expedite the delivery of goods and to import goods into
Nigeria without always paying applicable duties to the Nigerian government.
9. Customs Agent 1 is a Nigerian corporation that provides freight
forwarding, customs clearing, and haulage and general logistics services to companies
doing business in Nigeria. During the relevant period, Customs Agent 1 was one of
Transocean's customs agents in Nigeria.
10. Customs Agent 2 is a Nigerian owned limited liability company that
provides, among other things, customs clearing and freight forwarding and support
services to oil and gas services companies operating In Nigeria. During the relevant
period, Customs Agent 2 was one of Transocean's customs agents in Nigeria.
11. Executive A, a French citizen and United States pennanent resident,
worked at Transocean from 2000 to 2008 and was its President from approximately 2006
through 2008. From January to October 2002, Executive A was the Executive Vice
President, Operations based in Houston. Beginning October 2002, Executive A was the
Executive Vice President, Operations and Chief Operating Officer of Transocean.
Executive A left Transocean in March 2008.
12. Executive B, a French citizen" is currently an Executive Vice President at
Transocean. From 2001 to 2003, Executive B was the Region Manager of Transocean's
Africa Region, which covered offshore drilling operations in Nigeria. From 2003 to
4
·2008, Executive B was in charge ofTransocean's Europe and Africa Unit ("EAU"), first
as the Unit Manager, then as Vice President.
13. Manager C, a United Kingdom citizen, has been a Vice President at
Transocean since 2006. From August 2001 to January 2004, Manager C was
Transocean's Country Manager in Nigeria. From 2004 to 2006, he was a Director in the
Human Resources department.
FACTS
I. Transocean Made Illicit Payments Through its Customs Agents to Nigerian Customs Officials in Order to Facilitate Paper Moves of Rigs
14. Transocean provides offshore drilling services and equipment to oil
companies worldwide, including Nigeria. In order to conduct business operations in
Nigeria, Transocean must obtain permits for the temporary import of its rigs into
.Nigerian w~ters.
15. The Temporary Import Permits ("TIPs") are issued by the Nigerian
Customs Service ("NCS") and are typically valid for one year. Two six month TIP
extensions can be obtained, and a third extension is also available at the discretion of
NCS. When a TIP or TIP extension expires, Transocean must remove its rigs from
Nigeria or risk severe sanctions, including the forfeiture of its vessels to the government.
16. In 2002, certain Transocean managers, including Executive A, the then
Executive Vice President and Chief Operating Officer "(COO"), authorized four "paper
moves" for two rigs operating in Nigeria, the Searex XII and Sedco 709, because itwas
unwilling to interrupt profitable drilling operations once the relevant TIP or TIP
extension had expired. Another paper move involving a third rig, the Trident VIII, also
5
occurred in 2002. Two additional paper moves involving a fourth rig, the M.G. Hulme,
Jr., occurred in 2007. To create a fake paper trail and make it look as if the rigs had
moved from their respective drilling locations, Transocean obtained documentation from
its customs agents that falsely depicted the rigs entering or exiting Nigerian waters.
Transocean made illicit payments through its customs agents to Nigerian government
officials in connection with the paper moves, thus avoiding moving costs of
approximately $1,088,985 and gaining profits ofapproximately $3,172,378. 1
Transocean's total gain from the paper moves was approximately $4,261,363.
Transocean's management failed to stop the illicit conduct and in some cases even
approved it.
A. The 2002 Paper Moves
17. On June 10,2002, Manager C, Transocean's then Country Manager in
Nigeria, sent an e-mail to Executive B, the then Africa Region Manager, indicating that
there was a temporary import issue related to three of Transocean's rigs, Including the
Sedco 709 and the Searex XII. In the e-mail Manager C sought permission to do paper
moves which would falsely depict the rigs leaving and reentering the country when in
fact they never moved.
18. Manager C indicated that the paper moves were necessary in order to
create a more "defendable" file and to enable Transocean to avoid the severe penalties
connected with failing to move the rigs once the relevant TIP had expired. The e-mail
also contained a quote from Customs Agent 1 for the cost of obtaining false paperwork
There are substantial costs incurred when Transocean removes a rig from Nigerian waters. The costs include breaking down the rig, hiring tug boats, paying for licenses to tow the rig, and other associated costs. During the time that Transocean is breaking down the rig and transporting the rig out of Nigeria, Transocean is not operating the rig, and therefore obtains less revenue under a moving rate than would be earned from the drilling operation.
6
related to the paper moves from NCS. Manager C added that "The only alternative is to
physically move the rigs out of the country, and this is clearly not acceptable."
19. On June 11,2002, Executive B sent an e-mail to Executive A, .
Transocean's then Executive Vice President and COO in Houston, seeking authorization
for the paper moves. In justifying the paper moves, Executive B wrote: "We are not able
to stop the work-in-progress on each of these rigs to take them out of the country, since it
would create a major drilling interruption in our Clients (sic) programs." The same day,
Executive A sent an e-mail to Executive B approving the paper moves. Both the June 10
and June 11 e-mails were copied to the then-Region Finance Manager who was located in
Paris, France.
20. With management's authorization, Transocean subsequently made
payments to Customs Agent 1 knowing that some or all of the payments would be passed
on to NCS officials, in order to obtain false paperwork showing that the Sedco 709 left
Nigeria for Cameroon in June 2002. Transocean paid for additional paperwork showing
that the rig re-entered Nigeria in October 2002 under a new TIP when, in reality, therig
did not move.
21. Similarly, in 2002 Transocean made payments to Customs
Agent 1 knowing that some or all of it would be passed on to NCS officials in exchange
for false paperwork showing that the Searex XII rig left Nigeria for Cameroon in June.
2002, and returned to Nigeria in January 2003 on a one year TIP.
22. Prior to the date of the e-mail described above, in March 2002 Transocean
made illicit payments to Customs Agent 2 to obtain false paperwork showing that another
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vessel, the Trident VIII, had left Nigeria in March 2002, when in fact the rig did not·
depart Nigeria until November 2003.
B. The 2007 Paper Moves
23. Two more paper moves occurred in 2007 when Transocean made
payments through Customs Agent 2 to NCS officials to obtain false paperwork showing
that the M.G. Hulme, Jr. rig had left Nigeria in May 2007 and re-entered Nigeria in June
2007 on a one year TIP. In fact, the rig did not leave Nigeria, but instead moved to
another off shore drilling location before leaving Nigeria in July 2007. The moves
occurred even though, according to one October 10,2002 e-mail from Transocean's
Business Unit Supply Chain Manager - Nigeria to Manager C and others, Transocean had
planned to cease doing paper moves after 2002. At the time of the 2007 paper moves,
. Transocean was on notice of problems with its TIP process.
24. On April 27, 2004, the Nigerian Temporary Import Permit Panel (the "TIP
Panel") notified Transocean that Transocean would be penalized approximately $1.17
million (162 million naira) after an investigation showed Transocean had not complied
with TIP laws. In May 2004, Transocean's Corporate Affairs Manager in Nigeria sent
several emails informing the Transocean customs supervisor that he had visited a member
of the TIP Panel and discussed making a payment to reduce the penalty. In particular, the
email stated that "We will spend money on them [TIP Panel members] through him, but
defiJiitely we will pay less to the Federal Government." On July 28,2004, the penalty
was reduced to $340,000 (45 million naira). While there is no record indicating what
payment, if any, was in fact made to the Nigerian TIP Panel official, the TIP Panel
investigation put Transocean on notice that there were problems with the TIP process.
8
II. Transocean Made Illicit Payments through its Customs Agent to Nigerian Customs Officials in Connection with the Inward Clearance of its Rigs into Nigerian Waters
25. In addition to the paper moves described above, from approximately 2002
to 2006, Transocean made illicit payments totaling $207,170 to Customs Agent 2 for
what were described on invoices as "customs intervention" charges related to six rigs.
Transocean's employees believed that the invoiced "intervention" charges, which related
to the inward clearance of Transocean's rigs into Nigeria and the registration of a bond,
were likely illicit payments to customs officials.
26. The intervention payments were illicit payments to ensure that Transocean
could operate its rigs in Nigerian waters without proper paperwork and without
compliance with local law requirements. The payments were made in u.s. dollars to
Custom Agent 2's account at Citibank N.A. inNew York. The payments were recorded
as legitimate business expenses in Transocean's books and records.
III. Transocean Made Illicit Payments through Panalpina and Pancourier to Nigerian Customs Officials to Import Goods into Nigeria and to Avoid Paying Applicable Duties to Nigerian. Customs Officials
27. From 2002 to 2007, Transocean made illicit payments to Nigerian customs
officials through Panalpina, a freight forwarding company headquartered in Switzerland,
and Panalpina's express door to door courier service, Pancourier, to import goods and
materials into Nigeria without paying applicable duties to Nigerian customs officials.
28. From January 2002 to September 2005, Transocean used Pancourier 404
times to import various goods and materials into Nigeria without paying any customs
duties to the Nigerian government. The total invoiced amount for the 404 shipments was
$472,341.87.
9
29. Files maintained by Transocean show that Pancourier invoiced Transocean
for "local processing charges" related to the shipments, and that the invoice amounts
were typically 25% to 40% of the actual duties that were owed.
30. In 2005, after customs issues related to the use of Panalpina began to
surface publicly, Transocean instructed its employees in Nigeria to conduct an internal
investigation of their use ofPancourier. One of the employees involved in the internal
investigation, the Nigeria customs supervisor, was one of the employees using Pancourier
to import goods and materials into Nigeria without paying applicable customs duties.
31. The employees set up a meeting with a manager of Panalpina, who
admitted that Pancourier was not compliant with Nigerian law, and that Panalpina had
"made arrangements" with Nigerian customs officials related to shipments on behalf of
Transocean and others.
32. The Transocean employees prepared a report of their findings in August
2005, and sent it to various individuals within the company, including Transocean's
General Counsel in Houston. The report contained a recommendation that Transocean
cease using Pancourier because of its "100% non compliance" with the law.
33. In August 2005, in response to the investigation, Transocean's
management put a new policy in place, which was memorialized in an e-mail, allowing
for limited use of Pancourier, but only with management pre-approval and proof of duty
payments.
34. Despite the new policy, Transocean used Pancourier eleven times between
August 2005 and September 23, 2005, and did not pay applicable customs duties or value
added taxes. After September 23,2005, Transocean used Pancourier seven additional
10
times; however, it appears that applicable customs duties were paid. The total invoiced
amount for the seven additional shipments to Nigeria was $100,720.49. .
35. The total customs duties that Transocean avoided through its use of
Pancourier for the 404 shipments to Nigeria were approximately $1,480,419.
36. Aside from its use ofPancourier, Transocean also used Panalpina to
expedite delivery of medicine and other goods into Nigeria. Transocean made illicit
payments through Panalpina to Nigerian government officials for the importation of those
goods totaling $32,741.
IV. Transocean Committed Anti-Bribery, Internal Controls, and Books and Records Violations
37. Transocean violated Section 30A when Transocean's senior management
and employees made illicit payments through their freight forwarding and customs agents
to Nigerian government officials to assist in obtaining or retaining business. As
described above, Transocean's senior management and employees made the payments
through Transocean's freight forwarding and customs agents in Nigeria for the purposes
of avoiding applicable customs duties on goods and materials imported into Nigeria, and
in connection with Temporary Import permits and the clearance of its rigs into Nigeria.
38. Transocean made the payments for the purpose of influencing Nigerian
customs officials and retaining profitable oil drilling contracts with its clients.
Transocean Inc. was headquartered in Houston at the time ofthe conduct, and one
individual in Transocean's senior management was located in Houston at the time that he
authorized illicit payments. Transocean made use ofD.S. mails and interstate commerce,
including the use ofD.S. banks, to carry out the scheme.
11
39. In connection with all of the illicit payments, Transocean failed to make
and keep accurate books, records and accounts. Many of the payments were
mischaracterized as legitimate business expenses in Transocean's books and records.
Some ofTransocean's conduct involved the use of false paperwork and false invoices.
40. Moreover, as evidenced by the extent and duration of the improper
payments to Nigerian officials, the improper recording ofthese payments in Transocean's
books and records, the failure of Transocean's management to detect these irregularities,
and the actual involvement ofcertain members of senior management, Transocean failed
to devise and maintain an effective system of internal controls to prevent or detect these
violations.
CLAIMS FOR RELIEF
FIRST CLAIM
[Violations of Section 30A of the Exchange Act]
Paragraphs 1 through 40 are realleged and incorporated by reference.
41. As described above, Transocean, through its officers, employees, and
agents, corruptly offered, promised to pay, or authorized payments to one or more
persons, while knowing that all or a portion of those payments would be offered, given,
or promised, directly or indirectly, to foreign officials for the purpose of influencing their
acts or decisions in their official capacity, inducing them to do or omit to do actions in
violation of their official duties, securing an improper advantage, or inducing such
foreign officials to use their influence with foreign governments or instrumentalities
thereof to assist Transocean in obtaining or retaining business.
12
42. By reason ofthe foregoing, Transocean violated, and unless enjoined will
continue to violate, Section 30A of the Exchange Act [15 U.S.C. § 78dd-l].
SECOND CLAIM
[Violations of Section 13(b)(2)(A) of the Exchange Act]
Paragraphs 1 through 42 are realleged and incorporated by reference.
43. As described above, Transocean, through its officers, employees, and
agents, failed to keep books, records, and accounts, which, in reasonable detail,
accurately and fairly reflected its transactions and dispositions of its assets.
44. By reason of the foregoing, Transocean violated, and unless enjoined will
continue to violate, Section 13(b)(2)(A) of the Exchange Act [15 U.S.C.
§ 78m(b)(2)(A)].
THIRD CLAIM
[Violations of Section 13(b)(2)(B) of the Exchange Act]
Paragraphs 1 through 44 are realleged and incorporated by reference.
45. As described above, Transocean failed to devise and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions were execut~d in accordance with management's general or specific
authorization; and (ii) transactions were recorded as necessary (1) to permit preparation of
financial statements in conformity with generally accepted accounting principles or any
other criteria applicable to such statements, and (II) to maintain accountability for its
assets.
13
46. By reason ofthe foregoing, Transocean violated, and unless enjoined will
continue to violate, Section 13(b)(2)(B) of the Exchange Act [15 U.S.C.
§ 78m(b)(2)(B)].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a final
judgment:
A. Permanently restraining and enjoining Transocean from violating Sections
30A, 13(b)(2)(A) and 13(b)(2)(B) ofthe Exchange Act [15 U.S.C §§ 78dd-l,
78m(b)(2)(A), and 78m(b)(2)(B)];
B. Ordering Transocean to disgorge ill-gotten gains wrongfully obtained as a
result of its illegal conduct and prejudgment interest thereon; and
C. Granting such further relief as the Court may deem just and appropriate.
Dated: ~2010 Respectfully submitted,
~ Ceryl J. c oro (D.C. Bar No. 422175) Tracy L. rice Denise Hansberry
Attorneys for Plaintiff, u.S. Securities and Exchange Commission 100 F Street, NE Mail Stop 6030 SPII Washington, DC 20549-6030 . (202) 551-4403 (Scarboro)
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